Morgan Stanley Chief Executive Officer James Gorman, who took over from John Mack in January, said he's not content with results for last year, when the company reported its first per-share annual loss.
Morgan Stanley Chief Executive Officer James Gorman, who took over from John Mack in January, said he's not content with results for last year, when the company reported its first per-share annual loss.
“We are not satisfied with our performance,” Gorman said today in a letter to shareholders. “Our goal, as we move forward, is to rank in the top three in the key businesses in which we operate.”
Morgan Stanley, the sixth-biggest U.S. bank by assets, trailed rivals including Goldman Sachs Group Inc. in trading revenue last year. Gorman's New York-based firm has hired more than 350 employees as part of a “revitalization” of its sales and trading business, he said in the letter.
Analysts surveyed by Bloomberg News expect the firm to post adjusted earnings of $2.85 a share in 2010, according to the average of 27 estimates. That would be the largest profit since 2006.
Gorman, 51, said “headwinds” related to the firm's tightening debt spreads are “largely behind us.” Those charges reduced the firm's revenue last year by $5.5 billion and lowered earnings per share by $2.84, according to the letter.
Morgan Stanley's joint venture with Citigroup Inc.'s Smith Barney wealth-management unit “is going to play an increasingly important role in our growth and profitability,” Gorman said. Morgan Stanley purchased a controlling stake in the venture last year, giving it about 18,000 financial advisers and $1.56 trillion in client assets as of Dec. 31.
There is “no question” that Morgan Stanley and the financial industry benefited from the Treasury Department's Troubled Asset Relief Program and other government efforts to stabilize markets, Gorman said.
He also called on the industry to “work as partners with regulators and legislators” in shaping regulatory reform, and declared his support for a systemic-risk regulator with the ability to prevent “excessive” risk taking.
“In the wake of the financial crisis, we believe that fundamental regulatory reform is critical for our industry--and the global capital markets,” Gorman wrote. “We are committed to working cooperatively with policy makers and to playing a constructive role in building a new regulatory framework.”
